Start Your Own Business in North Carolina: Seven Steps You Need to Take

From licenses and permits to taxes and insurance, learn what you need to do to start a business in North Carolina.

Here’s an overview of the key steps you’ll need to take to start your own business in North Carolina.

Step 1. Decide on a Legal Structure

The most common legal structures for a small business are:

sole proprietorship

partnership

limited liability company (LLC), and

corporation.

There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Check Choose Your Business Structure on Nolo’s website for more information on how to choose the best ownership structure for your business.

Sole proprietorships and partnerships in North Carolina must file a Certificate of Assumed Name if they use a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership). The certificate is filed with the County Register of Deeds.

If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Namefor more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Searchfor more information.

Partnership: To create a general partnership in North Carolina, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement . The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see How to Form a Partnership in North Carolina. To form a limited liability partnership (often used by professionals), you must file an Application for Registration with the North Carolina SOS. For more information, see How to Form a Limited Liability Partnership in North Carolina.

Corporations: To create a corporation in North Carolina, you must file Articles of Incorporation with the North Carolina SOS. You will also need to appoint a registered agent in North Carolina for service of process. Although not legally required, you also should prepare bylaws to establish your corporation’s internal operating rules. Bylaws are not filed with the state. S Corporations must also file IRS Form 2553, Election by a Small Business Corporation, with the IRS. For more information, see How to Form a Corporation in North Carolina.

Step 4. Licenses and Permits

Tax Registration. If you will be selling goods in North Carolina, you must register to collect sales tax with the North Carolina Department of Revenue (DOR). If you will have employees in North Carolina, you must register with the DOR for employer withholding tax. For both types of tax, you can register using Form NC-BR either online or using aweb fillable PDF form.

EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.

Professional and occupational licenses. These cover people who work in various fields. You can get information about the state agencies that license and regulate many professions and occupations from the nccareers.orgwebsite.

Step 5. Business Location and Zoning

You’ll need to pick a location for your business and check local zoning regulations. That includes if you work from home. You may be able to find zoning regulations for your town or city by checking municode.com.

Step 6. Taxes and Reporting

Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form D-400).

Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, every partnership doing business in North Carolina also must file Form D-403, Partnership Income Tax Return.

LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, depending on how the LLC is classified for federal tax purposes, the LLC itself may have to file an additional state tax form. The LLC also must file an annual report with the North Carolina SOS. See North Carolina LLC Annual Report and Tax Requirementsfor more information.

Corporations. Shareholders must pay states taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to North Carolina corporation taxes and a corporate franchise tax. Finally, corporations must file an annual report with the North Carolina SOS.

And, apart from North Carolina taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business, available at irs.gov.

Step 7. Insurance

Insurance is a good idea for most kinds of business. While insurance often is regulated at the state level, the types of business insurance available are usually similar across the fifty states. Check Obtaining Business Insurance for more information.